European governments were warned against complacency as US and International Monetary Fund officials told leaders at the World Economic Forum to strengthen their crisis defences.

With policy makers dominating the third day of the meeting in the Swiss resort of Davos, US Treasury Secretary Timothy F Geithner yesterday urged the euro area to boost its cache of bailout cash and protect Italy and Spain against the threat of a market rout. IMF Managing Director Christine Lagarde pressed Greece and its creditors to strike an agreement on cutting its debt burden. European Union officials say an accord may be imminent.

"The only way Europe's going to be successful in holding this together, making monetary union work, is to build a stronger firewall," Geithner told delegates in Davos.

The pressure reflects concern that Europe must still do more to defeat its debt crisis even after money market lending rates eased, Italian and Spanish bonds rebounded and stocks jumped. With European leaders meeting in Brussels on Jan. 30 to discuss their next steps, Fitch Ratings underscored the threat facing the region by downgrading Spain, Italy and three other euro countries yesterday.

"The sense of despair and inevitable failur